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Monday, May 01, 2006
Imation Announces Close on Acquisition of Memorex

Imation announced that it has completed the previously announced acquisition of Memorex in an all cash transaction, from Hanny Holdings of Hong Kong and other shareholders of Memorex.

Actual purchase price was $329 million, after net asset adjustments were made to the original purchase price of $330 million. Additional cash consideration ranging between $5 million and $45 million will be paid out over a period of up to three years after close, contingent on financial performance of the purchased business. In addition, customary closing costs and advisory fees of approximately $5 million have been incurred.

"This acquisition is a major strategic milestone for Imation, as we implement our profitable growth strategy," said Bruce Henderson, Imation Chairman and CEO. "We are adding a powerful consumer brand and the U.S. market share leader in recordable CDs and DVDs, as well as an experienced retail team. With Imation's deep technology expertise, strong business-to-business brand, global footprint, broad product portfolio and industry experience, we are creating a new global powerhouse in the data storage industry. Over the past three months, we have completed detailed integration planning and look forward to a rapid transition to the combined company."

Memorex will become a division of Imation Corp and the consumer products businesses in the Americas for both the Memorex and Imation brands will be headquartered in Cerritos, CA. Ron Zinke, a vice president of Imation will assume the leadership role as vice president, America's retail consumer division, reporting to Frank Russomanno, EVP and COO of Imation. In Europe and Asia Pacific regions, Memorex products will be added to the existing Imation portfolio and those regional organizations will then take both brands to market.

Michael Golacinski, President and CEO of Memorex International, Inc., has announced his decision to pursue interests outside of Imation and will provide consulting support during a transition period to aid in the integration of the two organizations.

In Memorex's fiscal 2005, ended March 31, the company reported revenue of $430 million and operating income of $30 million. In the subsequent two quarters, ending September 30,2005, Memorex's revenue totaled $205 million and operating income totaled $14 million. After completion of integration, Imation expects Memorex to be significantly accretive adding approximately $32 million to $36 million in annualized operating income and approximately $0.40 to $0.47 earnings per share. This estimate includes synergy benefits, purchase price amortization expenses and the assumed loss of interest income due to cash used in the acquisition. Imation anticipates significant synergy benefits, from operating efficiencies including expense reductions, purchasing, and supply chain benefits. The full integration of Memorex into Imation which will result in these benefits is anticipated to be completed by the end of 2006.

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